Canadian Tire Stock Rose 15% in January 2023

Canadian Tire (TSX:CTC.A) stock continues to climb upwards yet still trades in value territory and with a solid dividend, as well.

| More on:
Profit dial turned up to maximum

Image source: Getty Images

Canadian Tire (TSX:CTC.A) has been celebrating a lot lately. Last year, the company celebrated 100 years of being a Canadian icon. Yet that’s not the only reason for some balloons. Canadian Tire stock has been doing quite well, with shares climbing 15% in January alone.

What’s been going on with Canadian Tire stock, and should investors jump on board? Or is a dip in store for Canada’s chain?

What happened?

There has been inflation, rising interest rates, a restriction on consumer spending, and yet here is Canadian Tire stock outperforming the rest. It’s proven to analysts time and again that the company is resilient, with plenty in place to continue keeping revenue strong.

As inflation becomes more under control, analysts believe that the stock will see more growth once more. In fact, one analyst believes it should outperform the rest in the near future.

The key here for analysts is the auto parts sector of the store. It’s a top choice for Canadians seeking auto parts and has proven this during the downturn. Yet Canadians are likely to move back towards the stock for more than just new tires in the months to come.

Still holds value

Analysts believe that the stock fell after its strength during the pandemic, as Canadians moved back to other stores for their necessities. However, it now offers substantial value and has proven to provide protection as well.

That protection comes from a wide range of products and programs on offer by Canadian Tire stock: it has the Triangle Loyalty program, a buy-now-pay-later offering, a broad arrange of products, its own brands, the Marks and SportsChek banners, a wide range of quality, and its own warehouses.

What’s insane, however, is that the company still trades in value territory, even after all this. Currently, investors can pick up Canadian Tire stock trading at 9.55 times earnings. That also comes with a 4.4% dividend yield as well.

100 years of growth

Look to the past if you want to see where your investment could be headed in the future. Canadian Tire stock has been resilient before, and it’s proving to be resilient once again. So, looking at how it’s performed in the last 20 years is certainly helpful.

In that time, shares have climbed 700%! That’s a compound annual growth rate (CAGR) of 10.95%. And note, that’s through two recessions and several downturns, including the pandemic, which it managed to sail through.

As for its dividend, Canadian Tire stock has a CAGR at an incredible 15.67% over the last decade. And those dividends have remained steady, providing you with a reason to hold the stock, even during the worst of times.

Bottom line

No matter what happens in the next year on the markets, Canadian Tire stock should continue to perform as it has in the past. While there may be a slight dip, those 100 years of history certainly come with advantages. If you don’t know where else to go for parts and products, you’re likely headed to a Canadian Tire store — especially if it concerns auto parts. That is why investors should continue to consider the stock for another 100 years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

money cash dividends
Dividend Stocks

Sitting on $10K? Invest in This TSX Stock for a Chance at $160K in 10 Years

Stocks are down, but don't count them out. TFSA investors should continue to invest in strong companies that should recover…

Read more »

analyze data
Dividend Stocks

How Much Do You Need to Invest to Give Up Work and Live Only Off Dividend Income?

Here's an honest assessment of how difficult it is to achieve "quit-your-job" levels of passive income.

Read more »

Profit dial turned up to maximum
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts

The TSX telecom sector has some great high-yielding companies up for grabs.

Read more »

TFSA and coins
Dividend Stocks

Dividend Stocks With Yields TFSA Investors Should Lock In Now!

Are you looking to build a passive-income stream? Here are two top dividend stocks to load up on in your…

Read more »

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

Is it a Trap? 3 TSX Stocks With Ultra-High Dividend Yields 

Who doesn’t love dividends? But the high-interest rate environment makes ultra-high dividends unsustainable. Are these stocks a value trap?

Read more »

Value for money
Dividend Stocks

3 Value Stocks for Superior Returns in 2023

Given their solid underlying businesses, stable cash flows, high dividend yields, and attractive valuations, these three undervalued TSX stocks could…

Read more »

Financial technology concept.
Dividend Stocks

2 TSX Value Stocks to Buy for Peace of Mind (and a Crazy-Good Deal)

2 TSX stocks that could outperform in the long term.

Read more »